States Sue to Block End-of-July Mental Health Grant Termination Plan

July 10, 2026 sparked a new federal court fight over school mental health funding. Oregon and California attorneys general filed a lawsuit asking a judge to stop the U.S. Department of Education from ending (or “terminating”) congressionally authorized, school-based mental health grant programs at the end of July, arguing the move is designed to sidestep an earlier court order.

What the states filed—and what they’re trying to stop

In a multistate complaint led by the Oregon Department of Justice (AG Rayfield) and the California Department of Justice (AG Bonta), the states challenge the Department of Education’s reported plan to terminate certain school mental health grant programs as the new school year approaches. The practical issue is timing: school districts typically need reliable federal funding decisions early enough to staff and support mental health services.

The states also asked the court for a preliminary injunction—an order that would pause the challenged action while the case proceeds. A preliminary injunction is not a final ruling on the merits, but it is the mechanism plaintiffs use to try to prevent immediate, real-world harm.

The legal theory: alleged attempt to evade a prior injunction

The states’ central argument is that the Department’s end-of-July termination effort conflicts with what a court previously required in the State of Washington v. U.S. Department of Education litigation. The earlier track included a W.D. Washington preliminary injunction order (Document 193, filed Oct. 27, 2025) and an appellate context in which the Ninth Circuit denied an emergency stay on Feb. 24, 2026 (Order No. 26-510).

In the July 10 filing, Oregon and California frame the new termination approach as an effort to continue discontinuations in a way they say violates the meaning/effect of the earlier order—specifically the restriction on stopping grant discontinuations “through any means.”

What the grants are for (in plain terms)

These are school-based mental health grants intended to support hiring, training, and deployment of school mental health professionals, along with expanded services for students. That’s why the states focus on the speed of the Department’s timing: counseling and related staffing decisions can be difficult to reverse once the school year is underway.

What to watch next for districts and families

For parents, students, and school employees, the near-term question is whether the court will grant preliminary relief and, if so, what it requires the Department to do next. In practical terms, readers should watch for:

• Action on the preliminary-injunction request (whether the judge issues order-level relief while the case proceeds).
• Department implementation steps tied to the end-of-July termination plan described in the complaint.
• District budgeting and staffing updates—especially whether districts receive clear guidance in time to plan for 2026–27 mental health services.

The dispute ultimately turns on how judges interpret the earlier order and whether the Department’s new termination approach would effectively undermine what the court already restricted.

Sources

• Oregon DOJ: July 10, 2026 lawsuit press release (AG Rayfield)
• California DOJ: July 10, 2026 lawsuit press release (AG Bonta)
• W.D. Washington: Document 193 preliminary injunction order (Oct. 27, 2025)